Gaining an Edge through Cold Calling
By Ed Rogan, Owner, Co-Founder
In many ways, commercial real estate is an “eat what you can kill” industry. The most successful investors, developers, brokers and other CRE professionals earn their living by scouring the market to uncover the next big deal. Ask the industry’s best and they’ll often tell you: I didn’t get here by accident. I worked my tail off to get to where I am today.
And yes, that even means cold calling.
Cold calling is probably one of the top ten most difficult jobs, regardless of which industry you’re in. It may not be physically demanding, but cold calling is mentally excruciating. It’s just not natural to deal with continuous and constant rejection. Yet those who can learn to maximize their cold calling efforts will benefit from having a thicker skin (a must in commercial real estate!), and in turn, will gain a competitive advantage over their peers.
How to Gain a Competitive Edge with Cold Calling
Despite popular belief, cold calling remains a highly effective tool for commercial real estate investors looking to source new deals. To be sure, “cold calling” is a bit of a misnomer. The most successful CRE professionals have learned to leverage ownership records and property data to guide their efforts. Instead of shooting in the dark, CRE developers can now be more targeted with their prospecting efforts.
Here are some of the best practices for CRE investors, developers and the like who are looking to amplify their business through cold calling.
Create a Cold Calling System
In order to be most effective, every CRE professional should develop a cold calling system of some sort. This system can take many forms. By standardizing your outreach efforts, you’ll be able to identify your strengths and weaknesses to improve your cold calling approach over time.
The first input into any cold calling system should be understanding your target demographic.
Depending on your purpose for reaching out to someone, your audience will change. For example, if you’re a developer looking to raise capital for a new real estate fund (i.e. a syndicate), you’ll probably be targeting accredited investors of a particular type.
Conversely, if you’re a developer looking to invest in a value-add redevelopment opportunity, you might approach the owners of existing assets to discuss their interest in partnering with you to that end. In the latter example, an unsophisticated owner may be longing to improve their property but need the support and guidance of someone else to make it happen, or simply be willing to sell.
Conduct Thorough Research
Prior to calling a single prospect, it is important to do your due diligence. There are many tools available today (PropertyShark, the MLS, CoStar and Reonomy are just a few) to track down ownership information and property data. These databases are particularly helpful in the event a property is held in an LLC, which is often the case. Historically, you’d have to scour county and state records to find out who’s behind the LLC.
Sometimes the public record would include a mailing address for the LLC, which is only mildly beneficial. Now, privately aggregated data sources through a site like Reonomy will provide not only the names of the LLC’s managing members, but also email addresses and multiple phone numbers – both of which are essential for cold calling efforts.
Once you know who owns a property, you can then search to see if they have any other holdings. Before picking up the phone, it is helpful to know whether someone owns a single property or several, where these properties are located, when they were purchased, how much debt is on the property and more. Having this information in hand will help to steer your conversation accordingly.
For example, let’s say you’re looking to sell a property you’ve previously purchased, improved and are now ready to exit. One approach would be to call anyone who has recently sold a nearby multifamily property in the past three months. That person may be desperate to roll the proceeds of their sale into what’s known as a 1031-exchange, a tool commonly used to defer paying capital gains tax but which requires the seller find a “like kind” investment property within 180 days.
Create a Cold Calling Script in Advance
There’s nothing worse than calling a prospect and fumbling over your words. The best cold calls rely on a carefully crafted script that ensures the conversation gets off to a good start.
Of course, this comes with a caveat: you don’t want to sound like a robot when you’re calling someone.
You want to appeal to the person on the other end of the line. You must find a way of grabbing their attention without being too forceful. How do you do this? Go back to your target demographic. What appeals to them? Why would they want to talk to someone like you? Try to understand their potential pain points before calling, and then speak to them in a common language.
When drafting your script, think of the initial cold call as an introductory conversation. There shouldn’t be a hard sell at this point. You need to build trust with this person first. Otherwise, they won’t give you the time of day.
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Any cold call is for naught if you don’t follow through as promised. Let’s say you’ve approached someone about selling their property and have offered to send them some additional detail about your company and expertise. Plan on getting those materials out the door by the end of day—the following day at the latest. If you don’t follow-up with the person like you said you would, you’ll ruin any ounce of trust you just put so much effort into gaining. Be a person who does what they say they’re going to do.
Cold calling isn’t easy. In fact, it stressed out most commercial real estate professionals, even those who have been in the industry for decades. But it’s a skill that can be learned over time, and a skill that, once mastered, can lead to incredible results.
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